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LATEST UPDATES: Tracking COVID-19 (coronavirus)

As COVID-19 Pandemic Takes Hold, Governments And Schools Face Budget Challenges

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Speaker 1: 00:00 In response to the coven 19 outbreak today, San Diego superior court dismissed all some end jurors until May 22nd the County is coronavirus update Tuesday afternoon delivered the sad news that another San Diego has died of the virus bringing the death toll in the County to, to also to infants in San Diego have tested positive for covert 19 as we struggled to come to terms with Corona virus as a public health crisis, the financial implications of this outbreak are not far behind. The Senate has reached a deal on a $2 trillion assistance package for American workers and businesses, but the impact of healthcare costs, unemployment and shrinking sales taxes are expected to have a profound impact on state and local governments. Joining me is, I knew source reporter Mary Plummer and Mary, welcome to the program. I'm Marie and thanks for having me. This is usually the time of year when local governments start drafting budgets. So our officials though still obligated to get those budgets out even during this outbreak.

Speaker 2: 01:06 Uh, yes. You know, many of those timelines are from, um, in the city of San Diego. For example, America. Kevin Faulkner faces and April 15th deadline, uh, to bring his budget proposal to the city council. The fiscal year begins July 1st. Um, that is when cities, counties and school districts have to have their budgets for the upcoming year finalized. Um, so all of this, as you can imagine, is extremely complicated by the fact that so many folks are working remotely for many government entities. This was already a very busy time of year and now that we're in the midst of the COBIT 19, uh, pandemic, all of that, uh, gets exacerbated. But yes, there are still deadlines to be met.

Speaker 1: 01:47 Let's start with the state budget picture. Former governor Jerry Brown, left office with a pretty big surplus that he'd say would help California weather a recession. How much money does California have in reserves and could that be enough to cushion the blow?

Speaker 2: 02:02 So California has roughly $20 billion billion with a B and its reserves. Those who followed former governor Jerry Brown will remember. He was really known for being pragmatic and he frequently warned of upcoming recessions during his yearly budget presentations. He really emphasized the need to prepare for a rainy day and with COBIT 19, that rainy day is certainly here. Um, I spoke with an expert of the public policy Institute of California who said, you know, this is really about the timing, the length of time, uh, that, that, that pandemic stretches on. If we're looking at a month or two. Uh, certainly those reserves should be enough to cover it. If it stretches far beyond that, uh, California is going to have some serious budget concerns to weigh. Um, governor Gavin Newsome said yesterday that California should expect social distancing measures to last, at least through April, uh, as the fights, the Corona coronavirus. But certainly, you know, the economic challenges will stretch much further.

Speaker 1: 03:05 Now, the County of San Diego is primarily responsible for the region's public health response to the outbreak. And it has also been known for having pretty healthy reserves. Could the outbreak though chip away at those reserves?

Speaker 2: 03:18 Uh, the County has said it's monitoring its finances carefully. And you're right, San Diego County does have a lot of funds to lean on. Uh, they had projected two point $2 billion in the general fund balance at the end of fiscal 2020. That's this fiscal year, but that was before the COBIT 19 outbreak. Uh, we spoke to board of supervisors trim and Greg Cox and he was quite candid and essentially said that the cost will have to be figured out later. He said cost will not be a factor. Um, he also mentioned that they expect to get reimbursed for some, but probably not all of the costs from the state and the federal government.

Speaker 1: 03:54 Now when it comes to the city of San Diego, city officials were already bracing for a budget shortfall before covert 19. How might the outbreak impact the city's general fund?

Speaker 2: 04:06 Uh, the city has a relatively healthy reserve, but it relies heavily on hotel tax revenue, which is taking a big hit right now, uh, with hotels across the city. Closing down, officials are really trying to get a sense of exactly what that means for the city's budget. Uh, I spoke with Jeff [inaudible], he's what the independent budget analysts office, which advises the city council. Here's what he said about the revenue cuts.

Speaker 3: 04:31 We're trying to figure out how, how severe and how far that would carry into the next year, which begins on July 1st. And of course there are no clear answers there, but the department of finance is contingency planning for what that might look like.

Speaker 2: 04:45 So, you know, lot lots of unknowns and not a whole lot of time, um, for city officials to get together a plan in terms of their finances.

Speaker 1: 04:54 Do we know how much of an impact the city is taking in terms of convention cancellations and the dropoff of tourism?

Speaker 2: 05:03 Uh, so the San Diego convention center, a corporation told me that as of Monday, about 128,000 anticipated hotel room nights tied to conferences and events had been canceled. Um, those numbers are likely to rise given, um, that this could stretch out quite a ways. They had anticipated that, that, uh, that those, you know, stays and conventions would bring in about 4.5 million in hotel and sales tax revenue for San Diego. So that's kind of just a slice of the financial picture. Certainly. Um, you know, the, the, um, cascading problems here are going to go a lot further than, than just those hotel rooms.

Speaker 1: 05:44 And of course meanwhile, school districts are facing an uncertain future. San Diego unified is moving to online instruction, but how are they preparing to address funding concerns?

Speaker 2: 05:56 So school budgets rely largely on funding from the state. Governor Gavin Newsome has announced big help for school districts. Um, I spoke with Peter Birdsall, he's the executive director of the California County superintendent's association. Uh, we talked about the budget challenges that school districts face in the wake of Coban 19. Here's what he said.

Speaker 4: 06:18 Well, first of all, we went into this whole thing with each huge budget concerns. As I said, the governor really helped enormously by saying we're going to keep districts whole. Um, but I think every district in the state would say whole is not where they should be.

Speaker 2: 06:33 So bird's all his point here is that, you know, we, we went into this with huge challenges. He says school districts will be fine through the end of this year, but there are a ton of unknowns about next year. How to get students back into school safely. All of the costs associated, um, that are going to come with students having been out of school for weeks, potentially months. Um, so, you know, for now, schools are being taken care of by the state, but certainly a lot of questions when we look further into next fall. And I have been speaking with our new source reporter, Mary Plummer. Mary, thank you. Thank you.

The coronavirus outbreak is creating big-budget unknowns for cities, the county and schools. The future of billion-dollar budgets is unclear as local governments, schools respond to the virus.

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Maureen Cavanaugh and Jade Hindmon host KPBS Midday Edition, a daily radio news magazine keeping San Diego in the know on everything from politics to the arts.